Beyond Gaming

There's new focus on licensing at Electronic Arts. The video game developer has switched from picking up partnerships to making them. EA, these days, is licensing out. After mo

April 6, 2018

6 Min Read

There's new focus on licensing at Electronic Arts. The video game developer has switched from picking up partnerships to making them. EA, these days, is licensing out. i1_593.jpg

After more than a quarter decade of developing video games from both original content and building the brands of established properties via electronic media, EA is turning its own titles into merchandise, comic book series, novels, videos and even feature films. "We're like a sleeping giant that is waking up and realizing it's sitting on a $4 billion portfolio," says Patrick O'Brien, vice president of EA Entertainment.

It's a strategy dubbed internally as "IP Cubed," a three-pronged effort to move beyond EA's core video games and use books and movies in addition to games to promote properties.

The game Dead Space was EA's first such effort and has spawned a comic book series and an upcoming animated DVD. Next up are extensions for Dante's Inferno, released as a game this spring. As with Dead Space, Dante's will have an animated DVD but will go much further. Universal Pictures is producing a film version, a comic book series is in the works with DC Comics, and Random House has rights to a Dante's Inferno novel. Another EA property, Army of Two, will also be made into a feature film with Universal Pictures.

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Upcoming fall releases include a series of unique collectibles based on Spore, an interactive program that lets players create and grow their own creatures from a single cell. Begun online as a single player game, Spore already has expanded into versions for game consoles, collectible cards, T-shirts and posters. With an estimated 100 million Spore creatures created by users, this next licensing effort has massive potential and offers a great example of creative licensing and what EA plans for this business going forward.

Spore unleashes each player's creativity, and each creation is unique. Through a partnership with Z Corp., players now can upload creatures to a dedicated site and order solid figurines of their own designs, getting back a 3-D action figure in living color. "This is the kind of extensions that we think are perfect for something like Spore," says O'Brien. Next up will be a mass-market line of action figures from a partnership with IMG.

EA paired up with IMG in February 2008 to develop its sports properties. The bench here is deep, as the EA Sports division holds the licenses for Madden NFL, FIFA Soccer, NHL, NBA Live, NCAA Football, Tiger Woods PGA Tour and NASCAR racing.

"When you think sports video games, you think ES," says Daniel Siegel, vice president of brands and trademarks at IMG. "The level of awareness and equity they've built up in the brand over the years makes it far and away the leader. Their market share in sports video games is approximately 60 percent."

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"EA Sports is the most exciting brand that we work on right now," Siegel says. "It's ripe for licensing brand extensions that make sense to the consumer." Upcoming product releases include sporting equipment that allows kids to learn each sport in unique ways that correlate to age and ability. "When you play one of the [video] games you actually learn more about the sport. We take that element out of the game and put it into the product," Siegel says.

The first product in the partnership pairs EA Sports and Toy Island (a wholly owned subsidiary of Li & Fung) for a series of instructional, interactive products relative to baseball, football, basketball, soccer and hockey. Through the inclusion of microchips and radio frequency, each item serves as an instructional tool for the user.

Products include a line of interactive training tools featuring voice commands and instructional coaching elements designed to elevate a child's play to more advanced levels. The products will be available for three youth categories: ages 3 to 6, 6 to 9 and 9 to 12. i4_142.jpg

A soccer ball for kids ages 3 to 6 has a compass to sense gravitational north and gives audio responses to encourage a child to kick in the correct spot. Older kids will find built-in voice recognition technology on a pitching machine responds to specific pitch requests, and LED lights on a basketball backboard project the outline of a half court on the surface below and keeps track of points won. Kits provide everything for a game, including items like a tape measure to construct an accurate field of play.

Individual items will range from $10 to $70, and the line debuts for the fourth quarter 2009, with more products rolling out into late 2010. i5_111.jpgi5_t_37.jpg

"We're not looking to compete with Nike and Wilson; it's not meant to be that kind of a product," says Siegel. "There's a niche between the authentic side of things and the standard child's toy made of plastic. On that spectrum, in the middle, is where EA Sports is going to live."

IMG is applying that same premise to an EA apparel line developed with NTD Apparel. A lifestyle line focused on video gamers that goes beyond T-shirts emblazoned with a game title to loungewear meant to go from game playing to the street, targeting the coveted demographic of young male gamers.

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"They change their minds a lot and are fickle in terms of what they wear; it's a challenge," says Siegel. "We know [this] male is playing games hours and hours a day, and we need to translate that game into other things like apparel. That's a difficult thing to do, to get that young man and gives him what he needs."

That's not the only challenge. Internally, it's a big shift for a company of 7,000 employees and $4.2 billion in sales during its last completed fiscal year, ended March 31, 2009.

And in spite of a good video game market and popular console systems, EA has struggled to produce profits. Sales have been disappointing for the past three years, and final earnings for the most recent fiscal remain in negative territory. EA's return to profitability will come, according to management, from aggressive cost cutting and the restructuring of EA's businesses into four segments, including EA Sports.

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The slowdown is being felt industrywide. According to NPD, sales of video game hardware and software were down 17 percent in March from the same period the prior year, and EA's troubles aren't unique. Competitors THQ and Activision Blizzard have taken a beating from recessionary spending.

Competition is helping drive EA's licensing push, according to O'Brien. "Part of it is that we are getting a lot of interest from people, and frankly, some of our competitors—Halo, Guitar Hero, Call of Duty—have been doing this," he says. "I sound like a broken record, but it's high time we grabbed the bull by the horns and do what everyone with valuable intellectual property is doing."

And it seems EA is really only scratching the surface in terms of opportunities to license out. Management is actively seeking opportunities for one of its best-known titles, the Sims. "Our MySims and The Sims franchises have huge global fan bases of very loyal fans," says Steve Seabolt, vice president of global brand development for EA's Play Label. "We're looking to find the right partners to begin extending these brands beyond the PC and gaming consoles."

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